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Biogen (BIIB) Beats on Q2 Earnings & Sales, Announces Job Cuts

Biogen BIIB reported second-quarter 2023 adjusted earnings per share (EPS) of $4.02, beating the Zacks Consensus Estimate of $3.77. Earnings declined 23% year over year due to lower revenues. On a constant currency basis, earnings were flat.

Sales came in at $2.46 billion, down 5% on a reported basis (down 3% on a constant-currency basis) from the year-ago quarter, hurt by lower sales of multiple sclerosis (MS) drugs like Tecfidera and Tysabri. Sales beat the Zacks Consensus Estimate of $2.38 billion.

Product sales in the quarter were $1.85 billion, down 10.2% year over year. Revenues from anti-CD20 therapeutic programs declined 1% to $433.4 million. The revenues include royalties on sales of Roche’s RHHBY Ocrevus and Biogen’s share of Roche’s drugs, Rituxan and Gazyva. Contract manufacturing and royalty revenues rose 102% in the quarter to $197.5 million.

Multiple Sclerosis Revenues

Biogen’s MS revenues were $1.21 billion in the reporter quarter, down 15% on a reported basis and 14% on a constant currency basis year over year.

Tecfidera sales declined 36% to $254.2 million as multiple generic versions of the drug have been launched in the United States and new generic launches are ongoing in several EU countries. Tecfidera sales were better than our model estimate of $234.9 million but missed the Zacks Consensus Estimate of $271 million.

Vumerity recorded $146.2 million in sales, up 6.9%. Vumerity sales beat the Zacks Consensus Estimate of $141 million.

Tysabri sales declined 6.4% year over year to $483.1 million, which missed the Zacks Consensus Estimate as well as our estimate of $487 million. Tysabri sales are being hurt by pricing pressure and competition.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $302.4 million, down 13.6%, hurt by a continued shift from the injectable platform to oral or high-efficacy therapies.

Other Products

Sales of Spinraza rose 1% on a reported basis and 5% on a constant currency basis to $437 million. Spinraza sales were slightly better than the Zacks Consensus Estimate of $434 million but missed our model estimate of $445.6 million.

In the quarter, biosimilars revenues were flat year over year at $195 million. However, on a constant currency basis, biosimilar revenues rose 4%. While pricing pressure is hurting sales of anti-TNF biosimilar products in Europe, the launch of Byooviz (referencing Lucentis) must have benefited sales.

Biogen recorded a loss of $20 million of Alzheimer’s disease revenues, which included product revenues from Alzheimer’s drug Aduhelm and its portion of profit share from the Leqembi collaboration with Eisai.

The FDA granted traditional approval to Leqembi, an anti-amyloid beta protofibril antibody drug, for the treatment of Alzheimer’s disease, in early July. It was a huge milestone for the companies as Leqembi is the first Alzheimer’s drug to get traditional approval from the FDA. The FDA had granted accelerated approval to Leqembi in January.  However, the drug was not expected to contribute much to revenues until the Centers for Medicare & Medicaid Services (CMS) granted reimbursement for it under Medicare plans. Once Leqembi received traditional approval, the CMS also announced broader Medicare coverage for the same. A broad range of patients can get access to Leqembi following CMS’ decision.

Research and development expenses were $584.0 million, up 11% year over year. Adjusted selling, general and administrative expenses declined 4% year over year to $548.0 million driven by the company’s cost-saving initiatives.

2023 Guidance Maintained

The company maintained its previously issued earnings and sales guidance for 2023.

Total revenues are expected to decline at a mid-single-digit percentage in 2023 from the 2022 level.

Adjusted earnings are expected in the range of $15.00 to $16.00 per share.

Our Take

Biogen’s second-quarter results were better than expected as it beat estimates on both counts. It also maintained its previously issued financial outlook for 2023. As Biogen’s focus shifts to the new Alzheimer’s drug Leqembi, it announced a new restructuring program, which is expected to result in a headcount reduction of approximately 1,000 employees. The program is expected to generate approximately $1 billion in gross cost savings. Out of these savings, around $300 million are expected to be re-invested in new products and R&D activities, which should further save costs of $700 million by 2025.

In response, Biogen’s shares were up around 1.1% in pre-market trading.

Biogen’s stock failed to deliver any returns year to date while the industry declined 10%.

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While most of Biogen’s key drugs are facing declining sales due to intense competitive pressure, Biogen’s potential new products such as Leqembi for Alzheimer’s disease (already launched) and Qalsody (tofersen – approved in April) for amyotrophic lateral sclerosis and zuranolone for depression could help revive growth. A new drug application seeking approval of zuranolone for major depressive disorder and postpartum depression is under priority review in the United States, with a decision expected on Aug 5, 2023.

Zacks Rank & Stocks to Consider

Biogen currently has a Zacks Rank #3 (Hold).

Biogen Inc. Price and Consensus

Biogen Inc. Price and Consensus
Biogen Inc. Price and Consensus

Biogen Inc. price-consensus-chart | Biogen Inc. Quote

Some better-ranked biotech companies are Alkermes ALKS and ACADIA Pharmaceuticals ACAD. While Alkermes has a Zacks Rank #1 (Strong Buy), ACADIA Pharmaceuticals has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for Alkermes’ 2023 earnings per share have risen from 43 cents to $1.27. During the same period, earnings per share estimates for 2024 have risen from $1.78 to $2.08. Year to date, shares of Alkermes have risen 21.7%.

Earnings of Alkermes beat estimates in three of the last four quarters, witnessing an earnings surprise of 90.83%, on average. In the last reported quarter, Alkermes’ earnings beat estimates by 133.33%.

In the past 60 days, estimates for ACADIA Pharmaceuticals’ 2023 loss per share have narrowed from 56 cents to 31 cents while that for 2024 has improved from a loss of 7 cents to earnings of 47 cents. In the year so far, shares of ACADIA Pharmaceuticals have risen 88.6%.

Earnings of ACADIA Pharmaceuticals beat estimates in two of the last four quarters and missed the mark on two occasions. On average, the company witnessed a negative earnings surprise of 2.75% over the trailing four quarters.

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